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Introduction
The jurisdiction of Directorate of Enforcement (“ED”) to initiate action under the relevant laws and its power to make arrests has attracted a lot of attention and has been an important topic of discussion in the recent times. The Hon’ble Supreme Court in the case of Tarsem Lal v Directorate of Enforcement2 marked an extremely crucial development in the jurisprudence pertaining to powers of ED to arrest the accused under Prevention of Money Laundering Act, 2002 (“PMLA”). While providing clarity on multiple issues pertaining to arrest and bail provisions, inter alia, the Hon’ble Supreme Court delved with two main questions i.e. first, whether an accused who has not been arrested by ED, and appearing on summons, was required to apply for bail or anticipatory bail apprehending arrest on issuance of summons; and second, the power of ED to make an arrest when the Special Court3 has taken cognizance of the concerned matter. The Court while answering the former question in negative, opined that an accused who has not been taken into custody by ED and is appearing before the court owing to the call by way of a summons, then in that case he shall not be treated as if he is in custody, and it is not at all required for the accused to apply for bail. Regarding the second question, it was held by the Hon’ble Apex Court that once the cognizance of the matter is taken by the Special Court under PMLA, then ED and other authorities named in Section 19 of PMLA cannot exercise the power of arrest on the accused named in the complaint.
The present articles tries to shed light, in brief, on the facts and issues involved in the said case, and the highlights of the Supreme Court judgment. The judgment tries to clear the muddle around the cases involving similar situation, and also acts as a beacon to the bar and the bench.
Factual Matrix
The ruling in the case of Tarsem Lal (supra) is not situated on a peculiar fact scenario involved in a single case, rather the Hon’ble Supreme Court has clubbed all sort of cases where the accused were named in the complaints under section 44(1)(b) of the PMLA and wherein albeit registration of the Enforcement Case Information Report (“ECIR”) the accused were not arrested by ED till the Special Court took cognizance of the respective case. Another crucial fact situation relating to the said cases was that these were the cases where despite being served with summons the appellant did not appear, and thereafter a warrant was issued to ensure their presence. Once the warrants were issued, the accused approached the Special Court while applying for anticipatory bail.
Issue
Whether officers of ED can exercise power to arrest under Section 19 of PMLA once the Special Court takes cognizance of the offence punishable under Section 4 of PMLA?
Decision
The pronouncement made by the Apex Court can be classified under various heads:
Appearance in pursuance of summons does not amount to custody
The Court ruled that any appearance made by an accused pursuant to a summon cannot be equated to the person being in custody. The Court interpreted that the very existence of Section 205 of CrPC highlights the distinction between two situations being a) where the accused is in custody of the authority; and b) where the accused has not been arrested by the authority. As per the court, if a non-arrested accused appears before the Court pursuant to the summons and he is deemed to be in custody, then Section 205 of CrPC dealing with dispensing of the personal attendance would not have been provided for. As it is imperative to note that no occasion arises for a court to dispense with the personal attendance of the accused if he is already under custody.
Application for bail not required when accused is appearing in person on summons.
The Court observed that if a person is appearing pursuant to summons issued, that means such person is not in custody. Thus, in such a scenario there arises no question of granting bail to such person. Furthermore, the Court elucidated, even when an accused furnishes a bond pursuant to appearance owing to summons under Section 88 of the CrPC, it is nothing but an undertaking on his behalf to appear before the court or else pay the amount mentioned in the bond upon failure to appear.
ED cannot exercise its power to arrest the accused once Special Court takes cognizance
The Hon’ble Supreme Court ruled that once cognizance of the offence punishable under PMLA based on a complaint under section 44(1)(b) is taken by the Special Court, then ED and other authorities cannot exercise their power to arrest as provided under Section 19 of PMLA. The reason behind it being post cognizance by Special Court, the accused concerned comes under the jurisdiction of the Special Court, thereby, leaving ED and other authorities powerless. Thus, even if ED or such other authorities want the custody of the accused who appears after service of summons for conducting further investigation in the same offence, the ED will be required to seek custody of the accused by applying to the Special Court, only after the concerned court records its satisfaction regarding the need of custodial interrogation of the accused. Hence, in such a case, once the cognizance has been taken by a Special Court there cannot be any apprehension about arrest by ED. The court, however, clarified that the afore observation was only with respect to the situation where the accused was not arrested by the ED by exercising its power under section 19 of PMLA.
Complaint under section 44(1)(b) of the PMLA to be governed by relevant sections of Code of Criminal Procedure 1973 (“CrPC”)
The Apex Court held that provisions of the CrPC shall apply to the proceedings before a Special Court and once a complaint is filed before the Special Court, the provisions of section 200 to 204 of CrPC shall apply to the complaint if a prima facie case of an offence under section 3 of PMLA is made out basis the complaint under section 44(1)(b) of PMLA.
The apex court highlighted that as per the scheme of both the Acts i.e. PMLA and CrPC, any provision of CrPC which is not in contravention to PMLA or where no similar provision in Pari Materia is present in PMLA, the said provisions of CrPC shall be applicable to PMLA proceedings.
Conclusion
There has been a grey area around the procedure adopted by ED while issuing summons, which ultimately rolls down to the interpretation of PMLA and connected statutes. The present judgment of the Hon’ble Supreme Court is certainly a welcome and positive step in mitigating haziness prevailing around arrest of an accused, appearing on summons before a Special Court, by ED. It provides clarity around the issues surrounding arrest and bail jurisprudence which directly impinged on the liberty of a person. The judgment will certainly put a full stop to the practice where some of the Special Courts took accused into custody after they appear pursuant to the summons issued in the complaint, and thus, the accused were compelled to apply for bail or anticipatory bail apprehending arrest upon issuance of summons. The Apex Court has termed such practice to be violative of right to liberty guaranteed under Article 21 of the Constitution of India.
By: Sumit Attri, Partner at Cyril Amarchand Mangaldas
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